REDWOOD CITY, Calif.--(BUSINESS WIRE)--
Shutterfly, Inc. (NASDAQ:SFLY), the leading manufacturer and digital
retailer of high-quality personalized products and services offered
through a family of lifestyle brands, today announced financial results
for the third quarter ended September 30, 2014.

"We are pleased with our third quarter results as we posted our 55th
consecutive quarter of year-over-year revenue growth," said Jeffrey
Housenbold, president and chief executive officer of Shutterfly. "We
continue to profitably grow the size of our consumer and enterprise
businesses, expand our portfolio of high quality, design-forward
products and service offerings across our family of premium lifestyle
brands, and increase the rate of monetization of our mobile investments.
We enter Q4 well prepared to handle this holiday season's expected
record order volumes with the highest level of execution."

Net revenues to range from $466.7 million to $481.7 million, a
year-over-year increase of 13.6% to 17.3%.

GAAP gross profit margin to range from 57.5% to 59.1% of net revenues.

Non-GAAP gross profit margin to range from 58.2% to 59.9% of net
revenues.

GAAP operating income to range from $113.3 million to $126.2 million.

Non-GAAP operating income to range from $139.5 million to $151.8
million.

GAAP effective tax rate to range from 13.9% to 14.6%.

GAAP net income per share to range from $2.35 to $2.60.

Weighted average diluted shares of approximately 40.0 million.

Adjusted EBITDA to range from $158.9 million to $170.8 million.

Full Year 2014:

Net revenues to range from $905.0 million to $920.0 million, a
year-over-year increase of 15.5% to 17.4%.

GAAP gross profit margin to range from 50.5% to 51.5% of net revenues.

Non-GAAP gross profit margin to range from 52.1% to 53.1% of net
revenues.

GAAP operating income/(loss) to range from ($0.9) million to $12.0
million.

Non-GAAP operating income to range from $95.6 million to $108.0
million.

GAAP effective tax rate to range from 16.5% to 20.0%.

GAAP net loss per share to range from ($0.36) to ($0.09).

Weighted average shares of approximately 38.5 million.

Adjusted EBITDA to range from $161.1 million to $173.0 million, or
17.8% to 18.8% of net revenues.

Capital expenditures to range from 9.5% to 10.5% of net revenues.

Notes to the Third Quarter 2014 Financial Results and Business Outlook

Adjusted EBITDA is a non-GAAP financial measure that the Company defines
as earnings before interest, taxes, depreciation, amortization and
stock-based compensation.

Free cash flow is a non-GAAP financial measure that the Company defines
as adjusted EBITDA less purchases of property, plant, and equipment and
capitalization of software development costs.

Non-GAAP earnings per share is defined as non-GAAP net income (loss),
which excludes interest expense related to the Company's issuance of
0.25% convertible senior notes in May 2013, divided by diluted non-GAAP
shares outstanding, which is GAAP diluted weighted average shares
outstanding less any shares issuable under the Company's convertible
senior notes.

Consumer category includes net revenues from stationery and greeting
cards, photo books, calendars and photo-based merchandise, photo prints,
and the related shipping revenues and rental revenue. Consumer also
includes net revenues from advertising and sponsorship programs.

Average Order Value (AOV) is defined as total net revenues (excluding
Enterprise) divided by total orders.

The foregoing financial guidance replaces any of the Company's
previously issued financial guidance which should no longer be relied
upon.

Third Quarter 2014 Conference Call

Management will review the third quarter 2014 financial results and its
expectations for the fourth quarter and full year 2014 on a conference
call on Wednesday, October 29, 2014 at 2:00 p.m. Pacific Time (5:00 p.m.
Eastern Time). To listen to the call and view the accompanying slides,
please visit http://www.shutterfly.com.
In the Investor Relations area, found in the "About Us" section, click
on the link provided for the webcast, or dial 970-315-0490. The webcast,
as well as a podcast, will be archived and available at http://www.shutterfly.com.
A replay of the conference call will be available through Wednesday,
November 12, 2014. To hear the replay, please dial 404-537-3406, replay
passcode 14952817.

Non-GAAP Financial Information

This press release contains non-GAAP financial measures. Tables are
provided at the end of this press release that reconcile the non-GAAP
financial measures that the Company uses to the most directly comparable
financial measures prepared in accordance with Generally Accepted
Accounting Principles (GAAP). These non-GAAP financial measures include
non-GAAP gross profit margin, non-GAAP operating income (loss) and
operating margin, adjusted EBITDA, free cash flow, and non-GAAP net
income (loss) per share. The method the Company uses to produce non-GAAP
financial measures is not computed according to GAAP and may differ from
methods used by other companies.

To supplement the Company's consolidated financial statements presented
on a GAAP basis, we believe that these non-GAAP measures provide useful
information about the Company's core operating results and thus are
appropriate to enhance the overall understanding of the Company's past
financial performance and its prospects for the future. These
adjustments to the Company's GAAP results are made with the intent of
providing both management and investors a more complete understanding of
the Company's underlying operational results and trends and performance.
Management uses these non-GAAP measures to evaluate the Company's
financial results, develop budgets, manage expenditures, and determine
employee compensation. The presentation of additional information is not
meant to be considered in isolation or as a substitute for or superior
to gross margins, operating income (loss), net income (loss) or net
income (loss) per share determined in accordance with GAAP. For more
information, please see Shutterfly's SEC Filings, including the most
recent Form 10-K and Form 10-Q, which are available on the Securities
and Exchange Commission's Web site at www.sec.gov.

Notice Regarding Forward-Looking Statements

This media release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, that
involve risks and uncertainties. These forward-looking statements
include statements regarding the Company's growth and financial
expectations for the fourth quarter and full year 2014 set forth under
the caption "Business Outlook," and statements about historical results
that may suggest trends for our business. The Company's actual results
may differ materially from those anticipated in these forward-looking
statements. Factors that might contribute to such differences include,
among others, economic downturns and the general state of the economy;
changes in consumer discretionary spending as a result of the
macroeconomic environment; the loss of sales partners for our products;
our ability to expand our customer base, increase sales to existing
customers and meet production requirements; our ability to successfully
integrate acquired businesses and assets; our ability to retain and hire
necessary employees, including seasonal personnel, and appropriately
staff our operations; the impact of seasonality on our business; our
ability to develop innovative, new products and services on a timely and
cost-effective basis; consumer acceptance of our products and services;
our ability to develop additional adjacent lines of business; unforeseen
changes in expense levels; and competition and the pricing strategies of
our competitors, which could lead to pricing pressure. For more
information regarding the risks and uncertainties that could cause
actual results to differ materially from those expressed or implied in
these forward-looking statements, as well as risks relating to our
business in general, we refer you to the "Risk Factors" section of the
Company's most recent Form 10-K and Form 10-Q, and the Company's other
filings, which are available on the Securities and Exchange Commission's
Web site at www.sec.gov.
These forward-looking statements are based on current expectations and
the Company assumes no obligation to update this information.

About Shutterfly, Inc.

Shutterfly, Inc. is the leading manufacturer and digital retailer of
high-quality personalized products and services offered through a family
of lifestyle brands. Founded in 1999, the Shutterfly, Inc. family of
brands includes Shutterfly,
where your photos come to life in photo books, cards and gifts; Tiny
Prints, premium cards and stationery for all life's occasions; Wedding
Paper Divas, wedding invitations and stationery for every step of
the planning process; Treat,
personalized greeting cards that really stand out; MyPublisher,
one of the pioneers in the photo book industry and creator of
easy-to-use photo book-making software; ThisLife,a
private, cloud-based solution that makes it easy for consumers to find,
share and enjoy their photos and videos, all in one place; and BorrowLenses,
the premier online marketplace for photographic and video equipment
rentals. For more information about Shutterfly, Inc. (NASDAQ:SFLY),
visit www.shutterflyinc.com.